An Obscure Competitor is Giving Away My Product

How do you know he's progressing faster? With your base of paying customers, you should be able to iterate faster than your competition. If you can't, and if you feel it's that much of a serious technical threat, then you may want to consider hiring a technical professional of your own.

At the same time, your business co-founder (presumably you're the one responsible for the technical side of the house while your partner is responsible for sales, marketing and biz dev) should seriously investigate if there is any merit to the competition's revenue model, and whether it's in your best interest to adopt a freemium model of your own (it may not be).

Given that you claim to have a working paywall model (something that I think many media companies and media brokers would kill for), your content must be a niche of some type.

Attack this problem from as many simultaneous angles as possible (technical/feature-parity, pricing and marketing). If you can learn faster than your competition (that doesn't necessarily mean release features faster -- "learn" is the keyword here) from your paying customers, then you should be in a much better position to stay ahead.

The fact that you said that the "[...] products will be functionally identical once both are deployed and out of beta" is a red-flag to me that you either haven't done enough analysis of the competition's feature set, or if you have, then you need to increase the tempo of customer feedback to incorporate into your product.

Perhaps you will say that as soon as you deploy new features based on your customer learnings, your competition will copy you. If that's the case, then (from a marketing angle) you will always be first to deliver features and should be able to please your customers faster, hopefully resulting in greater adoption (until you saturate your market).

I smell a lot of fear from your post. It may help to reframe your situation in a more positive light, since imitation is usually the highest form of flattery, while competition is sometimes used as a signalling mechanism (to yourself and others) that you picked a potentially profitable addressable market.

tl;dr

1) Congratulations! You're validating your business model and market with actual paying customers and (now) competition.

2) Figure out how long each of you can last if one of you gave the content away for free. Consider freemium for your own offering (teaser content?).

3) Increase, analyze and act on feedback from your customers faster.

4) Hire better technical talent.

Sorry I didn't answer your original question of "What do you do to push through it?" Hopefully the suggestions above will help to combat the dejection and loss of motivation.

First, thanks for the excellent reply. I'll try to address your points objectively, but this company is my heart and soul (not to mention my financial future) so I get emotionally invested quite easily.

"How do you know he's progressing faster?" > I watch his site develop as I develop mine, and he's got better versions of everything in place. My charts are static, his are dynamic. My page load times suck, his are fluid. And so on. We COULD iterate faster but we do not have the money to hire. We're making enough money to pay our editors and writers, and the founders are taking a paltry salary (I still do a bit of freelance writing to keep my bills paid), but not enough to pay for developers. This is why I have taken the helm and learned to hack!

My partner is also a lawyer, and handles everything related to tax, marketing, legal and bookkeeping. The competitor's revenue model is basically "run ads". I dont think he's even considering it as a real business. He's only a problem as long as his service is free, mind you. Once he starts charging, we have the advantage.

We don't "claim" to have a working paywall model; it's there. We are pulling down 5 figures of yearly revenue from subscriber fees (most of which goes towards overhead right now). We are indeed a very niche site, and our new product is targeted directly at both business and end-user customers within this niche. It's a product they're BEGGING for!

I'm about to give my business beta testers their first shot at the software, as soon as I can figure out why the whole thing is running so damned slow. From there I will have a tremendous advantage over the Other Guy. I'm learning as fast as I can, but I still -fear- that its not fast enough.

"The fact that you said that the "[...] products will be functionally identical once both are deployed and out of beta" is a red-flag" >> Hmm. I guess that's a bit short sighted of me. The concepts are the same, so I'm hoping my execution beats his.

I don't care if he copies my existing work; I care if he beats me to market and gets the publicity he needs to give away what I intend to charge for.

There is a lot of fear in my post because that's exactly what I'm feeling; its a new feeling for me. My site blazed a new trail in my industry; no one had dedicated an entire platform to our area before, and we haven't really experienced competition.

The competition only underscores just how good this idea is, and how important it is to get it to market ASAP.

I think I have to ensure our execution is better, our CORE feature set is comparable (not talking bells and whistles, i mean The One Thing that makes the product what it is), and we have the platform he lacks. Thanks again for taking the time to address this. Entrepreneurship is sometimes emotionally draining and it's great to have a community that understands the feelings that can sometimes crop up.

I guess its back to coding, then!

If you have no money, and you have a valid business then you have equity in a real company that you can trade to a developer for time. Consider coming off of some equity to get a developer on the field. Think of it this way, in any other competition in life, would you play a rookie or bring out the ringer for a dead heat? The talks with your competition did not go well because he knows what you know, he is outpacing you. If you don't think you can outpace the competition and the competition calls, you work a deal, if you think you are outgunning the competition you ignore their advances. Eventually a superior product will win out if there is no way for you to monopolize the market.

I try and remind myself there will always be competitors selling the same thing cheap enough to put you both out of business.

You have your users AND they are paying. How sustainable is a business where he absorbs all the costs and doesn't bring any revenue in? How much support can he continue provide to free users? Especially if they get into the large numbers.

You are treating it like a business, he is treating it like a project that he can drop at any time.

In my eyes, he is collecting your future customers for you. When he spends to the bottom of his pockets and folds, his customers will have to choose between your service or no service.

Hold on, keep focused on your lovely customers. Give them amazing service. Go above and beyond for them. Stir up a little press of your own (make your stake on first to market a little early)

Don't get caught up in looking over your shoulder.

Thanks to everyone who took the time to reply to this. It's really valuable to have a community like HN, who have been here and done this all before. I took the advice of "get over it and just keep hacking" and have just emailed the first batch of beta testers.

I spent a while on the front-end so it feels more like a 'product'. That actually had a powerful emotional effect on me; now I look at it with pride. I know it's just a few lines of CSS and big pretty fonts, but it just 'feels' like its real now.

I got to watch a user see the site for the first time yesterday and watch him interact with it. It was a nice moment.

My hope is that, even if this guy launches a product before I do, that we'll steal the spotlight due to our size and existing customer base. We can also offer support and on-demand customization (for the biz customers).

Now I just have to hope that people will actually pay for this! They're paying for written content, so I can't imagine that they won't pay for this.

If short-term technical issues, such as performance problems, are preventing your launch, why not just bring in an experienced developer for a few weeks as a consultant? You wouldn't have to pay them that much, I don't think. It might also be possible to defer payment partially if you are truly cash-strapped.

I don't know if this helps, but for business users, paid, stable, reliable-support, above-board businesses are worth real money. Red Hat makes essentially all their money offering support on a product they themselves make available for free.

Also: your competitor is not copying your content, is he? Is he able to code-up the platform AND pay for content creation on a free product?

No, he's not offering content at all (except a sporadic blog post). Our -new- product, the one that's going to bring us the growth we direly need, is the one that's being evolved on our two sites, in parallel.

If the products are identical as you said, then, even if the other developer is building at faster speed than you are I would say you still have the upper hand because of your greater visibility.

That said, if I were you I would launch a beta, even if its only a private beta, just to get the word out there, that way you can preempt his launch by getting the word out there. See every feature that its not completely necessary to the minimal viable product, cut those and launch.

Bests of luck!

This is a great comment I totally missed: just launch. The fact you have paying customers is a good sign what you've got is good enough.

+1

I have a few biz owners who are actually waiting for a beta invite already. I just put a nice UI on top of it last night so it looks like a 'product', and I'll be giving them the keys to test drive as soon as I rewrite my queries so it doesn't take 5+sec to render a graph and 20+ sec to pull historical pricing data.

Query run times, above all, is where my inexperience shows the most and is by far the most hamstringing part of this process.

Are you running a relational database? if so check all of your indexing. Unless you are doing some pretty crazy stuff indexing should reduce those queries to milliseconds.

Yes, mySQL. I'm sure I've made loads of mistakes in structuring things. I don't know where to start checking my indexes for mistakes though. Any resources you can point me at that are somewhat newbie friendly?

First thing to do is look at you where and order/group by clauses almost all of the items listed after them should have an index on them. Many should have a common index on the columns together, if they are used together a lot to filter information.

hmm. that makes a lot of sense. can you suggest some reading that can help me understand which types to use? I'm almost entirely self-taught on SQL so the result is "functional" code that's just not well-designed or optimal

$100/mo is nothing for a business user. If it is important to their business, it is not an issue. In fact, emphasize that paid support means you will be around to answer their questions.

Work on other forms of stickiness. If historical data can be presented in a useful form, then people will less likely to leave because it means leaving their old data behind.

Another form of stickiness is friends or social aspects.

Paid. Support. Where was I on that one? That's a GREAT selling point for us; we're known to have an insanely fast customer support response time, which we can sell.

He may be positioning himself to be bought out of the market by you. Keep your nose to the grindstone and get market share by making customers very happy they are with you.

Can you explain that more? You have to imagine that customers who are paying nothing for his product (except to be annoyed by "ONE WEIRD TRICK" ads) will be happy to have an alternative, but if they get the same basic functionality, won't they be glad they don't have to pay?

You very well lose customers if price is their pain point, but my point was to win them over with service and marketing and keep that competitor in obscurity. Or offer to buy him out so you can shut his site down.

Got it. That makes sense. We can't beat 'free' on the price point, that's for sure. But we -can- offer support, spend money on marketing, and hope that our existing platform keeps him in the dark.

37s' rework has a great chapter, "underdo your competition", I think its really applicable to your case.

It was quite brief but the point was made. Thanks, this book actually looks incredible!